Iowa High Quality Healthcare Initiative:

Transcription

1 Milliman Client Report Iowa High Quality Healthcare Initiative: April 2016 to June 2017 Capitation Rate Development Amendment State of Iowa, Department of Human Services Division of Medical Services, Iowa Medicaid Enterprise (IME) Prepared for: Elizabeth Matney Executive Officer 3 Medicaid Managed Care Director Prepared by: Robert M. Damler, FSA, MAAA Principal and Consulting Actuary Jennifer L. Gerstorff, FSA MAAA Consulting Actuary Chase Center/Circle 111 Monument Circle Suite 601 Indianapolis, IN USA Tel milliman.com March 10, 2016

2 Milliman Client Report Table of Contents I. BACKGROUND... 2 II. EXECUTIVE SUMMARY... 3 III. DATA RELIANCE... 7 IV. ACTUARIAL CERTIFICATION... 8 V. LIMITATIONS... 9 Appendix A: IHQHI Capitation Rate Summary Appendix B: SFY 2014 Base Data Actuarial Models Appendix C: April 2016 to June 2017 Capitation Rate Development IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

3 Milliman Client Report I. BACKGROUND (Milliman) has been retained by the State of Iowa, Department of Human Services, Division of Medical Services, Iowa Medicaid Enterprise (IME) to develop and certify actuarially sound capitation rates for the. The capitation rate development provided in this report is being provided as an amendment to the prior capitation rate certification as documented in the report, Iowa High Quality Healthcare Initiative: January 2016 to June 2017 Capitation Rate Development Bidder s Report (Report) dated July 30, The amendment has been developed to document the modifications that were applied to the previously certified capitation rates. The modifications were made due to policy and program changes, as well as a change in the effective date. We are also providing additional clarification in response to questions from the Centers for Medicare and Medicaid (CMS) regarding the capitation rate development. The amendment should be considered a supplement to the prior capitation rate report. All information presented in the prior report should be considered as part of the documentation of the revised capitation rates, unless specifically modified in the amendment. The amendment has also been developed to document to CMS compliance with actuarially sound capitation rate requirements as outlined in 42 CFR 438.6(c). The capitation rates within this amendment are certified as actuarially sound consistent with the documentation of the prior report. IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

4 Milliman Client Report II. EXECUTIVE SUMMARY Appendix A illustrates the updated capitation rates for the IHQHI. The values shown in Appendix A have not been adjusted to reflect provision for the ACA-mandated health insurer fee. The health insurer fee will be an additional amount paid to the health plans on a retrospective basis and is included under this capitation rate certification. There is a withhold arrangement under IHQHI defined as a 2% reduction to the capitation rate, which will be returned to the health plans upon achievement of certain measures included as terms of the statehealth plan contract. The values in Appendix A are illustrated on both a gross and net of the 2% withhold basis. The capitation rates have been shown for the state plan, including 1915(c) waiver services, and for the 1915(b)(3) expenditures. The following highlights the modifications that were included with this amendment. (a) Policy and Program Changes. The initial capitation rate certification reflected various policy and program changes. These were outlined in Section I.2.B.iv. on pages 13 and 14 of the certification report. Four of these items were not implemented. We have removed these adjustments from the calculations. Home Health Low Utilization Payment Adjustment (LUPA): CMS requested that the rate adjustment be removed from the capitation rates until the state receives approval. The estimated fiscal impact in our July 30, 2015 report was an increase of 2.06% to the impacted services. This impacted all rate cells which had home health services in their base experience. HCBS Provider Rate Increase: This adjustment was an inflation rate increase for HCBS providers. The increase was not implemented as stated in our July 30, 2015 report. The estimated fiscal impact was noted as an increase of 0.32% to the impacted services. This impacted the LTSS component for each of the HCBS waiver rate cells. Supported Employment Rate Adjustment: This adjustment represented an increase in certain HCBS waiver codes for supported employment services. The estimated fiscal impact in our July 30, 2015 report was an increase of 0.49% to the impacted services. This impacted the LTSS component for each of the HCBS waiver rate cells. Waiver Management: Rules related to a limitation or cap on total Intellectual Disability (ID) waiver services costs were not approved by the Legislature. Other waiver management changes noted in our July 30, 2015 report were implemented. The cap on ID waiver service was approximately 20% of the estimated (1.59%) decrease in expenditures for this policy change. We have amended the estimated fiscal impact to (1.27%) reduction of expenditures associated with waiver management. This impacted the LTSS component for each of the HCBS waiver rate cells. (b) The rating periods covered by the certification. The capitation rates were initially certified for an 18-month period, January 1, 2016 through June 30, Based on delayed implementation of the managed care program, we have adjusted the certification period to 15 months, from April 1, 2016 through June 30, The change in the rating period required 1.5 additional months of trend be applied to base experience. This change impacted all rate cells. (c) FQHC / RHC Base Data Adjustment The CMS review of the initial rate certification requested clarification regarding how the expenditures were adjusted for FQHC / RHC providers that receive an interim cost-based rate, rather than a PPS rate. The initial rate certification did not include an adjustment to reduce the cost-based values to a PPS rate. IME performed an analysis that estimated the fiscal impact to the clinic based expenditures to be $4.87 million out of $47.70 million in the fee-for-service base models or 10.21% reduction. We IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

5 Milliman Client Report applied the 10.21% reduction to the clinic category of service expenditures in the base model. This impacted all rate cells which had clinic services in their base experience. (d) Hospital Rebasing IME is updating the hospital fee schedule for non-critical access hospitals. Both hospital inpatient and hospital outpatient fee schedule values are being updated. The hospital inpatient fee schedule modifications reflect changes to the hospital inpatient DRG relative values, as well as the hospital specific conversion factors. The hospital outpatient fee schedule was also rebased, as well. We compared the updated hospital fee schedule to the baseline data to determine adjustment factors for the capitation rates. The fiscal impact associated with the hospital rebasing was ($7.7) million inpatient and $2.1 million outpatient. This impacted all rate cells with the exception of the Family Planning, Dual Eligible, LTSS-Elderly, and LTSS-Children s Mental Health rate cells. Table 1 provides the percentage impact on inpatient and outpatient services for each population. Group Name Table 1 State of Iowa Department of Human Services, Division of Medical Services Iowa Medicaid Enterprise Iowa High Quality Health Care Initiative Hospital Rebasing Impact Summary Inpatient Outpatient Non-CAH Impact All Hospital Impact 1 Non-CAH Impact All Hospital Impact 2 Newborn (6.50%) (6.02%) 0.50% 0.37% Children (2.62%) (2.42%) 0.05% 0.04% Non-Expansion Adult 0.79% 0.73% 1.06% 0.79% Pregnant Women (1.69%) (1.57%) 6.98% 5.22% Maternity Case Rate 3.15% 2.92% 0.00% 0.00% Wellness Plan (1.10%) (1.02%) 0.89% 0.66% Non-Dual <21 (11.83%) (10.96%) 0.13% 0.10% Breast and Cervical Cancer (9.27%) (8.59%) 0.00% 0.00% Non-Dual 21+ (1.56%) (1.44%) 0.10% 0.07% Dual Eligible 0.00% 0.00% 0.00% 0.00% Composite (1.90%) (1.76%) 0.65% 0.49% Notes: 1. Critical Access Hospitals (CAH) were estimated at 7.39% of total hospital inpatient expenditures. 2. Critical Access Hospitals (CAH) were estimated at 25.16% of total hospital outpatient expenditures. (e) 1915(b)(3) Services The initial capitation rate certification included state plan services and 1915(b)(3) services. The 1915(b)(3) services relate to behavioral health care services under the contract. We were requested to separate the capitation rate into the component for state plan services and the component for 1915(b)(3) services. The stratification of the capitation rates into these two separate components did not have a fiscal impact on the capitation rates. Each component includes both health care costs and administrative load. Further, the withhold will be applied consistently to each of the components. IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

6 Milliman Client Report (f) Pass-through Payments We have added two additional components to the capitation rates. These amounts are not at-risk payments. Graduate Medical Education (GME): We have added approximately $21.4 million to the capitation rates to reflect the inclusion of GME. Prior to implementation of IHQHI, IME made GME payments directly to qualifying hospitals. The payments are lump sum payments that do not coincide to individual claims. The GME will be paid on a per member per month basis within the capitation rates. The GME was allocated to the capitation rate cells for populations that qualify for GME payments. The health plans will be responsible for making the GME payments under the terms of the contract. The GME component is shown separately under the capitation rate summary. University of Iowa Physician Upper Payment Limit (UPL) Payment: The state of Iowa recently received CMS approval for a state plan amendment for UPL payments to be made to qualifying physicians with the University of Iowa. We have estimated the fiscal impact by identifying the qualifying physicians within the historical data and estimating the value of the increase to the average commercial reimbursement rate approved under the state plan amendment. The adjustment factor for the qualifying physicians was approximately $50.0 million. The payment has been shown as a pass-through on a per member per month basis using the historical utilization of services for the qualifying physicians and the reimbursement adjustment. The pass-through payment reflects the difference between the enhanced reimbursement and the underlying base fee-for-service reimbursement rate. All other assumptions outlined in the initial capitation rate certification report have not been modified. The non-benefit cost component was allowed to change for the components that were calculated as a percentage of the capitation rate; however, we have not applied the non-benefit cost component to the pass-through payments. Table 2 illustrates the fiscal impact of the policy and program changes that were applied to the capitation rates in the July 30, 2015 rate certification document. The fiscal impact analysis utilizes the SFY 2014 member months to estimate the expenditure change. IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

7 Milliman Client Report Table 2 State of Iowa Department of Human Services, Division of Medical Services Iowa Medicaid Enterprise Iowa High Quality Health Care Initiative Capitation Rate Amendment Changes (values in millions) Projected Fiscal Impact Policy / Program Change (State and Federal) July 30, 2015 Rate Certification Baseline $3,671.9 Adjust Clinic Services (5.0) Add 1.5 Months of Trend 7.9 Update HCBS Rate Increase (1.7) Update Employment Rate Increase (2.8) Update Waiver Management Rate Reduction 1.8 Remove Home Health Adjustment (2.7) Rebasing Hospital Inpatient (7.7) Rebasing Hospital Outpatient 2.1 GME Pass-through 21.4 Physician UPL Pass-through 50.0 Updated Rate Certification Amendment $3,735.3 IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

8 Milliman Client Report III. DATA RELIANCE We relied upon certain information provided by the State of Iowa, Department of Human Services. This includes fee-for-service claim expenditures, health plan encounter data, including medical services health plan data and behavioral health plan data, and Medicaid enrollment files. We have relied upon IME for the accuracy of the information provided. Although the data were reviewed for reasonableness, we have accepted the data without audit. To the extent the data provided to Milliman was incomplete or was otherwise inaccurate, the information presented in this report will need to be modified. It should be emphasized that capitation rates are a projection of future costs based on a set of assumptions. Results will differ if actual experience is different from the assumptions contained in this letter. IME and Milliman provide no guarantee, either written or implied, that the data and information is 100% accurate or error free. The capitation rates provided in this letter will change to the extent that there are material errors in the information that was provided. IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

9 Milliman Client Report IV. ACTUARIAL CERTIFICATION I, Robert M. Damler, am a Principal and Consulting Actuary with the firm of I am a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. I was retained by the State of Iowa, Department of Human Services, to perform an actuarial review and certification regarding the development of the capitation rates for the populations to be effective for the April 1, 2016 through June 30, 2017 contract period. I have experience in the examination of financial calculations for Medicaid programs and meet the qualification standards for rendering this opinion. I reviewed the information provided for reasonableness and consistency with an understanding of reimbursement for medical services under the Medicaid program in the state of Iowa. I have developed certain actuarial assumptions and actuarial methodologies regarding the projection of healthcare expenditures into future periods. The capitation rates provided with this certification meet the requirements defined in 42 CFR 438.6(c), including: The capitation rates have been developed in accordance with generally accepted actuarial principles and practices. The capitation rates are appropriate for the populations to be covered, and the services to be furnished under the contract. For the purposes of this certification actuarial soundness is defined as follows: Medicaid capitation rates are actuarially sound if, for business in the state for which the certification is being prepared and for the period covered by the certification, projected capitation rates including expected reinsurance and governmental stop-loss cash flows, governmental risk adjustment cash flows, and investment income provide for all reasonable, appropriate, and attainable costs, including health benefits; health benefit settlement expenses; marketing and administrative expenses; any government-mandated assessments, fees, and taxes; and the cost of capital. This certification is intended for the State of Iowa and should not be relied on by other parties. The reader should be advised by actuaries or other professionals competent in the area of actuarial projections of the type in this certification, so as to properly interpret the projection results. It should be emphasized that capitation rates are a projection of future costs based on a set of assumptions. Actual costs will be dependent on each contracted MCO s situation and experience. This actuarial certification has been based on the actuarial methods, considerations, and analyses promulgated from time to time through the Actuarial Standards of Practice by the Actuarial Standards Board. Robert M. Damler, FSA Member, American Academy of Actuaries March 10, 2016 Date IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

10 Milliman Client Report V. LIMITATIONS The services provided for this project were performed under the contract between Milliman and State of Iowa dated July 17, 2014 and amended January 26, The information contained in this report has been prepared for the State of Iowa, Department of Human Services, Division of Medical Services, Iowa Medicaid Enterprise (IME) and their consultants and advisors. It is our understanding that the information contained in this report may be utilized in a public document. To the extent that the information contained in this report is provided to third parties, it should be distributed in its entirety. Any user of the data must possess a certain level of expertise in actuarial science and healthcare modeling so as not to misinterpret the data presented. Milliman makes no representations or warranties regarding the contents of this letter to third parties. Likewise, third parties are instructed that they are to place no reliance upon this letter prepared for IME by Milliman that would result in the creation of any duty or liability under any theory of law by Milliman or its employees to third parties. Other parties receiving this report must rely upon their own experts in drawing conclusions about the capitation rates, assumptions, and trends. Any user of the values and information contained herein should have access to the entire capitation rate certification report. The information contained in this letter was prepared as documentation of the actuarially sound capitation rates for Medicaid managed care for the IHQHI managed care program in the State of Iowa. The information may not be appropriate for any other purpose. Although the capitation rates have been certified as actuarially sound, the capitation rates may not be appropriate for any individual MCO. Results will differ if actual experience is different from the assumptions contained in the capitation rate setting documentation. IME and Milliman provide no guarantee, either written or implied, that the data and information is 100% accurate or error free. Guidelines issued by the American Academy of Actuaries require actuaries to include their professional qualifications in all actuarial communications. The authors of this report are members of the American Academy of Actuaries and meet the qualification standards for performing the analyses in this report. IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10,

11 Milliman Client Report APPENDIX A IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10, 2016

12 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Gross Base Medical Capitation 1915b(3) Medical Gross Capitation GME UIHC Supplemental PMPM Supplemental PMPM Gross Total State Plan Rate 1915b(3) Children 0-59 days M&F 57,527 $ 1, $ 0.00 $ 5.28 $ $ 1, $ 0.00 Children days M&F 194, Children 1-4 M&F 717, (0.02) Children 5-14 M&F 1,342, (0.36) Children F 243, (2.92) Children M 217, (4.10) Non-Expansion Adults F 303, (8.34) Non-Expansion Adults M 70, (1.70) Non-Expansion Adults F 126, (4.72) Non-Expansion Adults M 54, (1.50) Non-Expansion Adults 50+ M&F 23, (1.83) Pregnant Women 118, (5.27) CHIP - Children 0-59 days M&F - $ 1, $ 0.00 $ 0.00 $ 0.00 $ 1, $ 0.00 CHIP - Children days M&F $ 0.00 CHIP - Children 1-4 M&F (0.02) $ 0.02 CHIP - Children 5-14 M&F 156, (0.36) $ 0.36 CHIP - Children F 26, (2.92) $ 2.92 CHIP - Children M 25, (4.10) $ 4.10 CHIP - Hawk-i 396,408 $ $ 0.00 $ 0.00 $ 0.00 $ $ 0.00 TANF Maternity Case Rate 4,374 $ 6, $ 0.00 $ 0.00 $ 0.00 $ 6, $ 0.00 Pregnant Women Maternity Case Rate 9,224 $ 5, $ 0.00 $ 0.00 $ 0.00 $ 5, $ 0.00 Wellness Plan F (Medically Exempt) 8,404 $ $ (0.71) $ 0.00 $ 9.74 $ $ 0.71 Wellness Plan M (Medically Exempt) 7, (0.26) Wellness Plan F (Medically Exempt) 12, (1.40) Wellness Plan M (Medically Exempt) 13, (0.64) Wellness Plan F (Medically Exempt) 16, (0.87) Wellness Plan M (Medically Exempt) 16, (0.57) Wellness Plan 50+ M &F (Medically Exempt) 30,004 $ $ (0.12) $ 0.00 $ $ $ 0.12 Wellness Plan F (Non-Medically Exempt) 75,640 $ $ (0.57) $ 0.00 $ 7.75 $ $ 0.57 Wellness Plan M (Non-Medically Exempt) 70, (0.20) Wellness Plan F (Non-Medically Exempt) 114, (1.11) Wellness Plan M (Non-Medically Exempt) 125, (0.51) Wellness Plan F (Non-Medically Exempt) 148, (0.69) Wellness Plan M (Non-Medically Exempt) 145, (0.45) Wellness Plan 50+ M&F (Non-Medically Exempt) 270,040 $ $ (0.09) $ 0.00 $ $ $ 0.09 Family Planning Waiver 288,967 $ $ 0.00 $ 0.00 $ 0.00 $ $ 0.00 ABD Non-Dual <21 M&F 106,302 $ $ (2.50) $ 5.28 $ $ $ 2.50 ABD Non-Dual 21+ M&F 246,727 1, (9.71) , Breast and Cervical Cancer 2,694 1, (1.19) , Residential Care Facility 8,517 $ 1, $ (31.73) $ 5.28 $ $ 1, $ Dual Eligible 0-64 M&F 315,371 $ $ (15.18) $ 0.00 $ 0.00 $ $ Dual Eligible 65+ M&F 71,746 $ $ (1.15) $ 0.00 $ 0.00 $ $ 1.15 Appendix A Milliman, Inc. Page 1 of 8

13 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Gross Base Medical Capitation 1915b(3) Medical Gross Capitation GME UIHC Supplemental PMPM Supplemental PMPM Gross Total State Plan Rate 1915b(3) Custodial Care Nursing Facility ,793 $ $ (0.07) $ 0.00 $ 0.00 $ $ 0.07 Hospice 65+ 7, (0.07) Elderly HCBS Waiver 105,822 $ $ (1.50) $ 0.00 $ 0.00 $ $ 1.50 LTSS blended with actual membership mix 236,171 LTSS blended with 3.25% rebalanced membership Custodial Care Nursing Facility <65 20,745 $ $ (2.39) $ 5.28 $ $ $ 2.39 Hospice <65 1, (2.39) Non-Dual Skilled Nursing Facility 947 2, (0.16) , Dual HCBS Waivers: PD; H&D 17, (5.91) Non-Dual HCBS Waivers: PD; H&D; AIDS 17,027 1, (2.21) , Brain Injury HCBS Waiver 14,011 $ $ (6.43) $ 5.28 $ $ $ 6.43 LTSS blended with actual membership mix 71,616 LTSS blended with 2.25% rebalanced membership ICF/MR 18,095 $ $ (0.07) $ 5.28 $ $ $ 0.07 State Resource Center 4, (0.01) Intellectual Disability HCBS Waiver 140,989 $ $ (5.91) $ 5.28 $ $ $ 5.91 LTSS blended with actual membership mix 163,964 LTSS blended with 1.0% rebalanced membership Children in a Psychiatric Mental Institute (PMIC) 5,793 $ $ (21.49) $ 5.28 $ $ $ Children's Mental Health HCBS Waiver 9,391 $ $ (4.71) $ 5.28 $ 7.22 $ $ 4.71 LTSS blended with actual membership mix 15,184 LTSS blended with 3.0% rebalanced membership Appendix A Milliman, Inc. Page 2 of 8

14 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Net Base Medical Capitation 1915b(3) Medical Net Capitation GME UIHC Supplemental PMPM Supplemental PMPM Net State Total Plan Rate 1915b(3) Children 0-59 days M&F 57,527 $ 1, $ 0.00 $ 5.28 $ $ 1, $ 0.00 Children days M&F 194, Children 1-4 M&F 717, (0.02) Children 5-14 M&F 1,342, (0.36) Children F 243, (2.87) Children M 217, (4.01) Non-Expansion Adults F 303, (8.18) Non-Expansion Adults M 70, (1.67) Non-Expansion Adults F 126, (4.62) Non-Expansion Adults M 54, (1.47) Non-Expansion Adults 50+ M&F 23, (1.80) Pregnant Women 118, (5.17) CHIP - Children 0-59 days M&F - $ 1, $ 0.00 $ 0.00 $ 0.00 $ 1, $ 0.00 CHIP - Children days M&F CHIP - Children 1-4 M&F (0.02) CHIP - Children 5-14 M&F 156, (0.36) CHIP - Children F 26, (2.87) CHIP - Children M 25, (4.01) CHIP - Hawk-i 396,408 $ $ 0.00 $ 0.00 $ 0.00 $ $ 0.00 TANF Maternity Case Rate 4,374 $ 6, $ 0.00 $ 0.00 $ 0.00 $ 6, $ 0.00 Pregnant Women Maternity Case Rate 9,224 $ 5, $ 0.00 $ 0.00 $ 0.00 $ 5, $ 0.00 Wellness Plan F (Medically Exempt) 8,404 $ $ (0.69) $ 0.00 $ 9.74 $ $ 0.69 Wellness Plan M (Medically Exempt) 7, (0.25) Wellness Plan F (Medically Exempt) 12, (1.37) Wellness Plan M (Medically Exempt) 13, (0.63) Wellness Plan F (Medically Exempt) 16, (0.86) Wellness Plan M (Medically Exempt) 16, (0.56) Wellness Plan 50+ M &F (Medically Exempt) 30,004 $ $ (0.12) $ 0.00 $ $ $ 0.12 Wellness Plan F (Non-Medically Exempt) 75,640 $ $ (0.56) $ 0.00 $ 7.75 $ $ 0.56 Wellness Plan M (Non-Medically Exempt) 70, (0.20) Wellness Plan F (Non-Medically Exempt) 114, (1.09) Wellness Plan M (Non-Medically Exempt) 125, (0.50) Wellness Plan F (Non-Medically Exempt) 148, (0.68) Wellness Plan M (Non-Medically Exempt) 145, (0.45) Wellness Plan 50+ M&F (Non-Medically Exempt) 270,040 $ $ (0.09) $ 0.00 $ $ $ 0.09 Family Planning Waiver 288,967 $ $ 0.00 $ 0.00 $ 0.00 $ $ 0.00 ABD Non-Dual <21 M&F 106,302 $ $ (2.45) $ 5.28 $ $ $ 2.45 ABD Non-Dual 21+ M&F 246,727 1, (9.52) , Breast and Cervical Cancer 2,694 1, (1.16) , Residential Care Facility 8,517 $ 1, $ (31.10) $ 5.28 $ $ 1, $ Dual Eligible 0-64 M&F 315,371 $ $ (14.88) $ 0.00 $ 0.00 $ $ Dual Eligible 65+ M&F 71,746 $ $ (1.13) $ 0.00 $ 0.00 $ $ 1.13 Appendix A Milliman, Inc. Page 3 of 8

15 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Net Base Medical Capitation 1915b(3) Medical Net Capitation GME UIHC Supplemental PMPM Supplemental PMPM Net State Total Plan Rate 1915b(3) Custodial Care Nursing Facility ,793 $ $ (0.07) $ 0.00 $ 0.00 $ $ 0.07 Hospice 65+ 7, (0.07) Elderly HCBS Waiver 105,822 $ $ (1.47) $ 0.00 $ 0.00 $ $ 1.47 LTSS blended with actual membership mix 236,171 LTSS blended with 3.25% rebalanced membership Custodial Care Nursing Facility <65 20,745 $ $ (2.35) $ 5.28 $ $ $ 2.35 Hospice <65 1, (2.35) Non-Dual Skilled Nursing Facility 947 2, (0.16) , Dual HCBS Waivers: PD; H&D 17, (5.79) Non-Dual HCBS Waivers: PD; H&D; AIDS 17,027 1, (2.17) , Brain Injury HCBS Waiver 14,011 $ $ (6.30) $ 5.28 $ $ $ 6.30 LTSS blended with actual membership mix 71,616 LTSS blended with 2.25% rebalanced membership ICF/MR 18,095 $ $ (0.07) $ 5.28 $ $ $ 0.07 State Resource Center 4, (0.01) Intellectual Disability HCBS Waiver 140,989 $ $ (5.79) $ 5.28 $ $ $ 5.79 LTSS blended with actual membership mix 163,964 LTSS blended with 1.0% rebalanced membership Children in a Psychiatric Mental Institute (PMIC) 5,793 $ $ (21.06) $ 5.28 $ $ $ Children's Mental Health HCBS Waiver 9,391 $ $ (4.62) $ 5.28 $ 7.22 $ $ 4.62 LTSS blended with actual membership mix 15,184 LTSS blended with 3.0% rebalanced membership Appendix A Milliman, Inc. Page 4 of 8

16 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Gross LTSS Capitation 1915b(3) Gross LTSS Capitation GME UIHC Supplemental PMPM Supplemental PMPM Gross State Total Plan Rate 1915b(3) Children 0-59 days M&F 57,527 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Children days M&F 194, Children 1-4 M&F 717, Children 5-14 M&F 1,342, Children F 243, Children M 217, Non-Expansion Adults F 303, Non-Expansion Adults M 70, Non-Expansion Adults F 126, Non-Expansion Adults M 54, Non-Expansion Adults 50+ M&F 23, Pregnant Women 118, CHIP - Children 0-59 days M&F - $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 CHIP - Children days M&F CHIP - Children 1-4 M&F CHIP - Children 5-14 M&F 156, CHIP - Children F 26, CHIP - Children M 25, CHIP - Hawk-i 396,408 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 TANF Maternity Case Rate 4,374 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Pregnant Women Maternity Case Rate 9,224 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan F (Medically Exempt) 8,404 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan M (Medically Exempt) 7, Wellness Plan F (Medically Exempt) 12, Wellness Plan M (Medically Exempt) 13, Wellness Plan F (Medically Exempt) 16, Wellness Plan M (Medically Exempt) 16, Wellness Plan 50+ M &F (Medically Exempt) 30,004 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan F (Non-Medically Exempt) 75,640 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan M (Non-Medically Exempt) 70, Wellness Plan F (Non-Medically Exempt) 114, Wellness Plan M (Non-Medically Exempt) 125, Wellness Plan F (Non-Medically Exempt) 148, Wellness Plan M (Non-Medically Exempt) 145, Wellness Plan 50+ M&F (Non-Medically Exempt) 270,040 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Family Planning Waiver 288,967 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 ABD Non-Dual <21 M&F 106,302 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 ABD Non-Dual 21+ M&F 246, Breast and Cervical Cancer 2, Residential Care Facility 8,517 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Dual Eligible 0-64 M&F 315,371 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Dual Eligible 65+ M&F 71,746 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Appendix A Milliman, Inc. Page 5 of 8

17 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Gross LTSS Capitation 1915b(3) Gross LTSS Capitation GME UIHC Supplemental PMPM Supplemental PMPM Gross State Total Plan Rate 1915b(3) Custodial Care Nursing Facility ,793 $ 4, $ 0.00 $ 0.00 $ 0.00 $ 4, $ 0.00 Hospice 65+ 7,556 3, , Elderly HCBS Waiver 105,822 $ 1, $ 0.00 $ 0.00 $ 0.00 $ 1, $ 0.00 LTSS blended with actual membership mix 236,171 $ 2, $ 0.00 $ 0.00 $ , $ 0.00 LTSS blended with 3.25% rebalanced membership $ 2, $ 0.00 $ 0.00 $ , $ 0.00 Custodial Care Nursing Facility <65 20,745 $ 4, $ 0.00 $ 0.00 $ 0.00 $ 4, $ 0.00 Hospice <65 1,831 2, , Non-Dual Skilled Nursing Facility , , Dual HCBS Waivers: PD; H&D 17,055 1, , Non-Dual HCBS Waivers: PD; H&D; AIDS 17,027 1, , Brain Injury HCBS Waiver 14,011 $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 LTSS blended with actual membership mix 71,616 $ 2, $ 0.00 $ 0.00 $ , $ 0.00 LTSS blended with 2.25% rebalanced membership $ 2, $ 0.00 $ 0.00 $ , $ 0.00 ICF/MR 18,095 $ 10, $ 0.00 $ 0.00 $ 0.00 $ 10, $ 0.00 State Resource Center 4,880 25, , Intellectual Disability HCBS Waiver 140,989 $ 3, $ 0.00 $ 0.00 $ 0.00 $ 3, $ 0.00 LTSS blended with actual membership mix 163,964 $ 4, $ 0.00 $ 0.00 $ , $ 0.00 LTSS blended with 1.0% rebalanced membership $ 4, $ 0.00 $ 0.00 $ , $ 0.00 Children in a Psychiatric Mental Institute (PMIC) 5,793 $ 5, $ 0.00 $ 0.00 $ 0.00 $ 5, $ 0.00 Children's Mental Health HCBS Waiver 9,391 $ 1, $ 0.00 $ 0.00 $ 0.00 $ 1, $ 0.00 LTSS blended with actual membership mix 15,184 $ 2, $ 0.00 $ 0.00 $ , $ 0.00 LTSS blended with 3.0% rebalanced membership $ 2, $ 0.00 $ 0.00 $ , $ 0.00 Appendix A Milliman, Inc. Page 6 of 8

18 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Net LTSS Capitation 1915b(3) Net LTSS Capitation GME UIHC Supplemental PMPM Supplemental PMPM Net State Total Plan Rate 1915b(3) Children 0-59 days M&F 57,527 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Children days M&F 194, Children 1-4 M&F 717, Children 5-14 M&F 1,342, Children F 243, Children M 217, Non-Expansion Adults F 303, Non-Expansion Adults M 70, Non-Expansion Adults F 126, Non-Expansion Adults M 54, Non-Expansion Adults 50+ M&F 23, Pregnant Women 118, CHIP - Children 0-59 days M&F - $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 CHIP - Children days M&F CHIP - Children 1-4 M&F CHIP - Children 5-14 M&F 156, CHIP - Children F 26, CHIP - Children M 25, CHIP - Hawk-i 396,408 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 TANF Maternity Case Rate 4,374 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Pregnant Women Maternity Case Rate 9,224 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan F (Medically Exempt) 8,404 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan M (Medically Exempt) 7, Wellness Plan F (Medically Exempt) 12, Wellness Plan M (Medically Exempt) 13, Wellness Plan F (Medically Exempt) 16, Wellness Plan M (Medically Exempt) 16, Wellness Plan 50+ M &F (Medically Exempt) 30,004 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan F (Non-Medically Exempt) 75,640 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Wellness Plan M (Non-Medically Exempt) 70, Wellness Plan F (Non-Medically Exempt) 114, Wellness Plan M (Non-Medically Exempt) 125, Wellness Plan F (Non-Medically Exempt) 148, Wellness Plan M (Non-Medically Exempt) 145, Wellness Plan 50+ M&F (Non-Medically Exempt) 270,040 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Family Planning Waiver 288,967 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 ABD Non-Dual <21 M&F 106,302 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 ABD Non-Dual 21+ M&F 246, Breast and Cervical Cancer 2, Residential Care Facility 8,517 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Dual Eligible 0-64 M&F 315,371 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Dual Eligible 65+ M&F 71,746 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Appendix A Milliman, Inc. Page 7 of 8

19 9:38 AM April 2016 to June 2017 Capitation Rate Summary Capitation Rate Cell SFY14 Member Months Net LTSS Capitation 1915b(3) Net LTSS Capitation GME UIHC Supplemental PMPM Supplemental PMPM Net State Total Plan Rate 1915b(3) Custodial Care Nursing Facility ,793 $ 4, $ 0.00 $ 0.00 $ 0.00 $ 4, $ 0.00 Hospice 65+ 7,556 3, , Elderly HCBS Waiver 105,822 1, , $ 0.00 LTSS blended with actual membership mix 236,171 $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 LTSS blended with 3.25% rebalanced membership $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 Custodial Care Nursing Facility <65 20,745 $ 4, $ 0.00 $ 0.00 $ 0.00 $ 4, $ 0.00 Hospice <65 1,831 2, , Non-Dual Skilled Nursing Facility , , Dual HCBS Waivers: PD; H&D 17,055 1, , Non-Dual HCBS Waivers: PD; H&D; AIDS 17,027 1, , Brain Injury HCBS Waiver 14,011 2, , $ 0.00 LTSS blended with actual membership mix 71,616 $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 LTSS blended with 2.25% rebalanced membership $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 ICF/MR 18,095 $ 10, $ 0.00 $ 0.00 $ 0.00 $ 10, $ 0.00 State Resource Center 4,880 25, , Intellectual Disability HCBS Waiver 140,989 3, , $ 0.00 LTSS blended with actual membership mix 163,964 $ 4, $ 0.00 $ 0.00 $ 0.00 $ 4, $ 0.00 LTSS blended with 1.0% rebalanced membership $ 4, $ 0.00 $ 0.00 $ 0.00 $ 4, $ 0.00 Children in a Psychiatric Mental Institute (PMIC) 5,793 $ 5, $ 0.00 $ 0.00 $ 0.00 $ 5, $ 0.00 Children's Mental Health HCBS Waiver 9,391 1, , $ 0.00 LTSS blended with actual membership mix 15,184 $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 LTSS blended with 3.0% rebalanced membership $ 2, $ 0.00 $ 0.00 $ 0.00 $ 2, $ 0.00 Appendix A Milliman, Inc. Page 8 of 8

20 Milliman Client Report APPENDIX B IHQHI Capitation Rate Development and Certification Amendment 0032IWM01-08 March 10, 2016

21 9:40 AM Rate Cell: Children 0-59 days M&F Member Months 48,063 March 2016 to June 2017 Capitation Rate Development FFS/MediPASS Base Data Prospective Adustments Rating Period Utilization Cost per Utilization Unit Cost Mgd Care Mgd Care Contracting Policy & Utilization Cost per per 1,000 Service PMPM Trend Trend Utilization Cost Adjustment Prog Adj. per 1,000 Service PMPM Medical/Surgical 1,042.5 $ 2, $ $ 2, $ Psychiatric/SUD 0.5 1, , Maternity - Delivery Maternity Non-Delivery Well Newborn 5, , Other Newborn 9, , , , , Subtotal 15,619.0 $ 1, $ 1, ,876.9 $ 1, $ 1, Emergency Room 1,256.8 $ $ $ $ 7.33 General 6, , Subtotal 8,126.3 $ $ ,563.1 $ $ Pharmacy 2,371.0 $ $ ,104.6 $ $ DME/Supplies/Prosthetics Ambulance Non-Emergency Transportation Home Health/Hospice 1, , Chiropractic Services Podiatry Vision Other Subtotal 4,779.5 $ $ ,210.5 $ $ Surgery 1,750.3 $ $ ,528.6 $ $ Anesthesia Inpatient Visits 11, , Urgent Care/Emergency Room 1, Office/Home Visits 3, , Preventive Care 13, , Maternity - Delivery Maternity - Non-Delivery Allergy/Immunotherapy Lab/Path/Rad 5, , Office Adm. Drugs Clinic 2, , Psych/SUD Physical Therapy Family Planning Other 1, , Subtotal 41,428.0 $ $ ,380.6 $ $ Total Medical 69,952.8 $ $ 2, ,031.1 $ $ 1, Category of Service - Iowa Plan for BH Inpatient Treatment - $ 0.00 $ $ 0.00 $ 0.00 Outpatient Treatment Intermediate Care Magellan Mass Adjustments Total Behavioral Health 5.9 $ $ $ $ 0.04 Short Term Institutional / HCBS - $ 0.00 $ $ 0.00 $ 0.00 Appendix B Page 1 of 73

22 9:40 AM Rate Cell: Children 0-59 days M&F Member Months 9,464 March 2016 to June 2017 Capitation Rate Development HMO Base Data Prospective Adustments Rating Period Utilization Cost per Utilization Unit Cost Mgd Care Mgd Care Contracting Policy & Utilization Cost per per 1,000 Service PMPM Trend Trend Utilization Cost Adjustment Prog Adj. per 1,000 Service PMPM Medical/Surgical $ 2, $ $ 2, $ Psychiatric/SUD Maternity - Delivery Maternity Non-Delivery Well Newborn Other Newborn 11, , , , , Subtotal 12,565.0 $ 1, $ 1, ,083.4 $ 1, $ 1, Emergency Room 1,610.2 $ $ ,306.8 $ $ General 7, , Subtotal 8,944.1 $ $ ,188.6 $ $ Pharmacy 2,656.4 $ $ ,560.0 $ $ DME/Supplies/Prosthetics Ambulance Non-Emergency Transportation Home Health/Hospice Chiropractic Services Podiatry Vision Other Subtotal 4,089.5 $ $ ,882.7 $ $ Surgery 1,934.3 $ $ ,894.0 $ $ Anesthesia Inpatient Visits 14, , Urgent Care/Emergency Room 1, , Office/Home Visits 5, , Preventive Care 19, , Maternity - Delivery Maternity - Non-Delivery Allergy/Immunotherapy Lab/Path/Rad 5, , Office Adm. Drugs Clinic Psych/SUD Physical Therapy Family Planning Other 1, , Subtotal 49,606.8 $ $ ,047.3 $ $ Total Medical 75,205.4 $ $ 1, ,202.0 $ $ 1, Appendix B Page 2 of 73

23 9:40 AM Rate Cell: Children days M&F Member Months 158,872 March 2016 to June 2017 Capitation Rate Development FFS/MediPASS Base Data Prospective Adustments Rating Period Utilization Cost per Utilization Unit Cost Mgd Care Mgd Care Contracting Policy & Utilization Cost per per 1,000 Service PMPM Trend Trend Utilization Cost Adjustment Prog Adj. per 1,000 Service PMPM Medical/Surgical $ 1, $ $ 1, $ Psychiatric/SUD 0.2 2, , Maternity - Delivery Maternity Non-Delivery Well Newborn Other Newborn 0.9 1, , Subtotal $ 1, $ $ 1, $ Emergency Room 1,608.6 $ $ ,264.7 $ $ General 6, , Subtotal 7,798.3 $ $ ,288.0 $ $ Pharmacy 5,194.2 $ $ ,610.6 $ $ DME/Supplies/Prosthetics Ambulance Non-Emergency Transportation Home Health/Hospice Chiropractic Services Podiatry Vision Other Subtotal 7,309.5 $ $ ,460.1 $ $ Surgery $ $ $ $ 4.16 Anesthesia Inpatient Visits Urgent Care/Emergency Room 1, Office/Home Visits 3, , Preventive Care 6, , Maternity - Delivery Maternity - Non-Delivery Allergy/Immunotherapy Lab/Path/Rad 2, , Office Adm. Drugs Clinic 1, , Psych/SUD Physical Therapy Family Planning Other Subtotal 17,151.8 $ $ ,198.2 $ $ Total Medical 32,513.8 $ $ ,140.8 $ $ Category of Service - Iowa Plan for BH Inpatient Treatment - $ 0.00 $ $ 0.00 $ 0.00 Outpatient Treatment Intermediate Care Magellan Mass Adjustments Total Behavioral Health 8.0 $ $ $ $ 0.06 Short Term Institutional / HCBS 1.8 $ $ $ $ 0.09 Appendix B Page 3 of 73